The Federation of Small Businesses (FSB) has called on the Financial Conduct Authority (FCA) to provide more protection for small business owners who use personal assets as collateral for commercial loans. It also suggests that the FCA is not doing enough to tackle issues that arose during the financial crash.
The call comes as the FSB responds to the FCA’s consultation on access to the Financial Ombudsman (FOS).
Only the smallest firms can currently make a complaint to the FOS. The FCA is proposing to widen the definition of ‘eligible complainant’ to include those with a turnover of under £6.5 million and fewer than 50 employees.
“Too often, the regulator doesn’t recognise that small business owners have far more in common with consumers than big corporations,” explained FSB National Chairman Mike Cherry. “In instances where small business owners are asked to put personal assets on the line to secure a loan, it’s hard to understand why that’s not deemed consumer lending. If you’re effectively offering your house as collateral to access new finance, common sense dictates that’s consumer activity.”
“Recent media investigations have raised serious questions about the Ombudsman’s capacity to take on more complex cases. Any widening of its remit must be accompanied by significantly increased investment,” he said.
“It could well be that expanding the FOS turns out to be a short-term fix,” he added. “Over the long-term, serious consideration needs to be given to a standalone tribunal for small firms. Many will still find themselves between a rock and a hard place: too big for the Ombudsman, too small to challenge financial giants.”
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